Contract will be worth $600M USD, but is expected to be cheaper than a self-built solution

Federal agencies have traditionally adopted a do-it-yourself approach to hosting and online presence management. But the U.S. Central Intelligence Agency (CIA) is shaking up that tradition, awarding a massive $600M USD, 10-year contract to Amazon.com, Inc. (AMZN), according to a new report.

Amazon is a top player in the cloud and SaaS industries. [Image Source: Murphy & Co.]

Amazon -- one of the world's biggest cloud hosts -- seems to be purpose-built for that role. Dave Powner, director of IT management issues at the Government Accountability Office, told online magazine FCW in an interview that the contract should help the CIA achieve that goal amid a harsh fiscal climate, stating, "In times of reducing budget situations you would expect to see agencies that haven't considered cloud solutions extensively in the past would be looking more and more of doing something along those lines."

The CIA and Amazon would neither confirm nor deny the contract, which was reported by FCW. A CIA spokesperson said, "As a general rule, the CIA does not publicly disclose details of our contracts, the identities of our contractors, the contract values, or the scope of work."

II. CIA Drops Hints That It's Shacking up With Amazon

However, the contract may have been hinted at by the CIA's Chief Information Officer Jeanne Tisinger in a March 12 speech to the Northern Virginia Technology Council Board of Directors. In that speech she stated that the shorter cycles and faster development pace of the corporate IT services industry provide advantages. She says that exploring software-as-a-service (SaaS) and commodity IT options could cut costs.

Audience members of the closed door meeting recall Ms. Tisinger stating that the CIA was working "with companies like Amazon."

CIA Chief Technology Officer Gus Hunt also told Reuters in a previous interview that when it came to the government acquiring "metered" cloud services that it should turn to the private sector. He is quoted as saying, "Think Amazon – that model really works."

It is unclear whether the new cloud (assuming it exists) will be housed internally (set up on site by Amazon) or remotely. Also unclear is how much of the agency's current proprietary clouds will be replaced by the new third-party-supplied homogeneous cloud. But what is clear is that the agency is shifting towards leveraging the efficiency of non-government commodity IT to cut its technology costs.